If I Receive Severance Pay from My Employer, Does It Affect My LTD Benefits?

If I Receive Severance Pay from My Employer, Does It Affect My LTD Benefits?

Federal law does not generally require employers to offer severance packages to their employees. However, many employers do offer these benefits to employees as an inducement to take early retirement or as part of a larger benefits package for a prospective employee. Severance pay can vary widely in its amount, duration, and other conditions that the employer places on it.

If you become disabled while on the job, you may be entitled to long-term disability benefits. Under these policies, which employers often provide to their employees at little or no cost, employees may qualify for benefits that typically amount to a specific percentage of their salaries. The conditions under which employees are considered disabled and how long they can receive those benefits can differ from one case to another. However, if you are receiving long-term disability (LTD) benefits, receiving severance pay at the same time can lead to a significant impact on your LTD benefits.

For instance, severance pay from your employer may act as an “offset” of your LTD benefits. For every dollar of severance pay that you receive, your LTD benefits would decrease by one dollar. Therefore, unless you are receiving a more significant amount of LTD benefits than severance pay, you may be unable to receive LTD benefits. Like some other benefits, such as Social Security Disability benefits, your severance pay will offset your LTD benefits.

Likewise, if an employer offers an employee a retirement or termination package of benefits that includes severance pay, the employer also is likely to require that employee to waive some rights. For example, the agreement could require the employee to forego any claims for LTD benefits or to give up his or her right to appeal a denial of LTD benefits. In some cases, it may be a more attractive option for an employee to accept a severance package than to collect LTD benefits.

Long-term disability claims are complex matters that require intensive knowledge of ERISA laws and regulations. As a result, you will need experienced legal representation and advice to pursue an ERISA-governed disability claim. Bonnici Law Group is a law firm focusing on ERISA long-term disability benefits and bicycle injury cases in San Diego, CA. When you need effective legal representation, contact Bonnici Law Group at 619-259-5199 or email us at help@bonnicilawgroup.com.

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